ARTICLE
STATE OF FLUX
2014 GLOBAL SRM RESEARCH REPORT
34
PROCUREMENT LIFECYCLE MANAGEMENT
NEW VALUE
SRM
ENHANCE VALUE
PERFORMANCE MANAGEMENT
MANAGE VALUE
CONTRACT MANAGEMENT
SECURE VALUE
RISK MANAGEMENT
CAPTURE VALUE
STRATEGIC SOURCING
IDENTIFY VALUE
CATEGORY MANAGEMENT
POST CONTRACT AWARD
PRE CONTRACT AWARD
© 2014 State of Flux
The diagram above illustrates how SPM and SRM form part of the wider holistic approach to supplier management. It starts with category and strategic sourcing management; and goes on to encompass risk and contract management; as well as SPM, and relationship management and development. Each activity provides inputs to, and takes outputs from, the other. While each organisation should develop its own definition to ensure language and terminology is familiar, the following might be a good place to start. SUPPLIER RELATIONSHIP MANAGEMENT (SRM) SUPPLIER RISK MANAGEMENT
A structured approach to working collaboratively with those suppliers that are vital to the success of the organisation, to create an environment where trust and collaboration will maximise the mutual value of those relationships.
Actions taken to minimise risk by identifying and analysing supplier related risk, followed by alignment to the business risk appetite, and proactive steps to mitigate and monitor supplier risk on an ongoing basis.
SUPPLIER PERFORMANCE MANAGEMENT (SPM)
CONTRACT MANAGEMENT
Activity focused on ensuring that business requirements are consistently met, by proactively managing service levels via key performance indicators (KPIs) developed from contractual service level agreements (SLAs). The KPIs are measured and reviewed on a regular basis. Any deviations from required performance levels are investigated, and corrective and improvement actions agreed and implemented.
An approach to good contract governance that will ensure all engagements are covered by valid contracts, and all key contract terms and obligations are understood, monitored and acted upon. Contract administration and change (including contract exit) is managed effectively.
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